Solutions to the moral hazard problem include
A) low net worth.
B) monitoring and enforcement of restrictive covenants.
C) greater reliance on equity contracts and less on debt contracts.
D) greater reliance on debt contracts than financial intermediaries.
B
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When unemployment is above its natural rate, the inflation rate will eventually
A) increase. B) become equal to the natural rate of unemployment. C) move to its natural rate. D) decrease.
We will generally observe that the less open an economy
A) the larger the effect of fiscal policy on output and the larger the effect of fiscal policy on the trade position. B) the larger the effect of fiscal policy on output and the smaller the effect of fiscal policy on the trade position. C) the smaller the effect of fiscal policy on output and the larger the effect of fiscal policy on the trade position. D) the smaller the effect of fiscal policy on output and the smaller the effect of fiscal policy on the trade position.